Scott Morrison’s pandemic recession busting budget and economic recovery plan are built on optimistic forecasts, classic Liberal commitments to private sector investment, a political pinching of Labor’s clothes and an assumption there will be a COVID-19 vaccine generally available next year.
It has also been made possible by historically low interest rates on a day the Reserve Bank kept official rates at just .25 per cent.
In a sea of uncertainty, Josh Frydenberg and Mathias Cormann have decided to make the brave assumption, based on health advice, that there will be a vaccine available to the general Australian population — and elsewhere — by late 2021.
This assumption underpins the 2020-21 budget strategy and drives the optimism of the economic forecasts which outline an almost unbelievable recovery in growth – 4.25 per cent – and jobs – down to 6.5 per cent – by the end of 2022.
The outlook turns contraction and a million unemployed into economic growth and an unemployment rate verging on the Treasurer’s own target of “comfortably below 6 per cent” by 2024.
This remarkable outlook – setting targets for delivery for the Coalition through to 2024 – is built on a record year of government spending of $504 billion aimed at saving jobs and businesses and boosting confidence and investment.
In coming to the 2020 Budget so late in the year the Prime Minister built phase on phase to fight the pandemic recession and now to plan a stabilisation of the economy and then a phased recovery.
With so much money spent the Budget numbers – apart from the record ultimate gross national debt of $1.7 trillion and deficit of $213 billion – virtually mean nothing and are likely to change within weeks.
The Budget is a curious Coalition document which aims the bulk of its tax cuts, job support, welfare, investment boosts and infrastructure spending at lower-income earners, smaller businesses and blue collar workers.
Morrison has continued to demonstrate he’s prepared to dump Liberal orthodoxy and economic ideology to spend hundreds of billions to support workers and stimulate the economy to fight the recession while pushing the burden on to the private sector for the recovery.
The Coalition has behaved more like a Labor government during the coronavirus pandemic as it bought its way out of a catastrophic economic disaster and boosted payments to low income earners but is now expecting Liberal principles to apply to the recovery.
That includes the hope there will be a vaccine which will allow desperate businesses to return to work and have borders opened while using cheap money to encourage business investment to create what almost looks like a rapid recovery.
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